What to expect after rehab?

[Anonymous]

I have 2 loans with the federal government, one subsidized and one unsubsidized, although I have 4 accounts reporting on EX and EQ. I am getting ready to make my 5th payment out of 9, but I am still confused about what to expect after the 9th payment. So my questions are.

Will the accounts on my credit report delete the late paids? or just get them out of default?

If they just get them out of default will the late paids ever fall off?

I pay only 5 dollars a month right now for rehab which is the min, will the payments for the fed loans be income adjusted like rehab?

[Anonymous]

Lates will remain on your credit report. They only promise to remove default status.

[SCF]

Once you complete rehab, all remarks and statuses relating to the rehab must be removed from the original tradelines.  Some companies will also remove the late pays, but they are not required to do so.  If the late pays remain, they will age off your report in 7 to 7.5 years.

Once your loan rehab is complete and your loan is being handled by a servicer again, you will be able to choose an income-driven payment plan, or apply for deferment or forbearances to reduce or delay payments.

[Anonymous]

When you say some companies will agree to remove late pays, which company whould that be? For example, my loan was with Direct Loans when I was late / defaulted. Now the loan is in rehab with National Recoveries, but when the rehab is complete the loan will go to a new servicer, correct? So which company actually removes the late payments, the old servicer or new?

[SCF]

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@Anonymous wrote:

When you say some companies will agree to remove late pays, which company whould that be? For example, my loan was with Direct Loans when I was late / defaulted. Now the loan is in rehab with National Recoveries, but when the rehab is complete the loan will go to a new servicer, correct? So which company actually removes the late payments, the old servicer or new?

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In your case, it would be Direct Loans, the company actually reporting the lates.  Companies can only update their own reporting with the CRAs - your new servicer has no ability to "make" the old servicer change their reporting.  When your rehab is completed, it's reported to a central database, and the old servicer is required to update their reporting based on that, but like I said, not all of them will go the extra step and remove the lates.

[Anonymous]

Awesome! Thanks for the info. I guess when the rehab is complete I'll request they remove the lates and hope for the best.

[Anonymous]

I was told by Great Lakes they cannot remove the deliquencies on a loan that led to default. This loan was rehabilitated and no longer shows that it was in default. I haven't had any late payments in 2 yrs, and i've had it reviewed by the Borrower Services Department. They made some adjustments on one loan due to an unemployment deferrment I had on one loan. For some reason it didn't apply to the others. Best of luck to you, and be sure to set up automatic payments

[Anonymous]

In 2013, I defaulted on my grad school loans which were broken up into two sets - one with Fedloans, the other with ACS. When I defaulted on the Fedloan loans, West asset management reached out to me for loan rehab and told me all negative remarks would be removed. But then after the completion, when the loans went to Nelnet, I discovered the Fedloans still have their 120+ late marks.

When the ACS loans went into default, they went to American Student Assistance, and from there I was contacted by Allied Interstate and they said from the start only default status would be removed, not "all negative remarks."

Since then, from everything I've read, it seems I like many was overpromised from loan rehab people about the negative remarks being removed.

(Note worth mentioning: At some point before West Asset Management - not sure which batch of loans it was with, the Fedloans one or the ACS ones -  I Was contacted by Performant who I swear was offering the same thing. For whatever reason we couldn't get the paperwork started.

One more thing worth mentioning is that West asset management said that all collection fees would be removed from the loans they rehabbed - which from my math seems to have been true. But Allied Interstate said they would put on a maybe 16% or something collection fee.